City Council sends water, sewer charge back to the drawing board

Published: Thursday, July 11, 2013 at 10:10 p.m.

Last Modified: Thursday, July 11, 2013 at 10:10 p.m.

An old issue bubbled to the surface at Thursday's Hendersonville City Council meeting — how much of an impact fee charged to new water and sewer customers is too much?

Facts

Changes in charges

Previously, the city's system development charges were based on meter size, starting at $800 for water customers and $1,400 for sewer customers, with the smallest meter graduating up to $80,000 (water) and $140,000 (sewer) for a 10-inch water meter.Utilities Director Lee Smith said the city decided to change the rate structure from a meter size to a demand base to apply a more “fair cost” to its customers and “level the playing field.”The new formula compares all commercial, industrial and institutional usage to residential usage. It takes the number of gallons a new customer proposes to use — or a minimum specified by the N.C. Administrative Code — and divides the number of gallons by 400 (NCAC's standard for the water daily flow rates of residences) for water or 360 (NCAC's standard for wastewater daily flow rates of residential customers) for sewer to find a Residential Equivalent Unit.The REU is then multiplied by the city's charge for water system development ($800) or sewer system development ($1,400) to find the new SDC.

The city has pondered that question for months. On Thursday, Larry Rogers, executive director of Partners for Economic Progress, added his answer.

In addition to paying tap fees, new customers are assessed a system development charge based on the city's incurred cost to connect a property to its system. In August 2012, City Council adopted a new formula for calculating the charge based on usage, which resulted in charges of up to five times the amount once paid on incoming businesses.

For some, the cost is 18 times what they paid to get a business going in the city three years ago, Rogers said.

“Recently, a local businessman that owns a drive-through car wash on the east side of town began to look at the possibility of building another one, say on Asheville Highway. He goes by the city water department and asked them to determine the costs to do this under the new city hook-up rules,” he said.

The businessman was astonished to learn that the estimated bill for the impact fee “came to an unreal $284,139,” Rogers said. The developer estimated his cost to hook up his existing car wash about three years ago was around $18,000.

“This is not the only charge that business owners face when building a new business in Hendersonville,” Rogers said. Outside of a tap fee, “they must pay for stormwater runoff installation costs, erosion control costs, sidewalks, landscaping, building permits and inspection fees. The new Boyd Automotive business being constructed on Spartanburg Highway has already endured over $486,000 in city-required fees and payments on their $3 million project... We ask City Council to reconsider your anti-growth business policies.”

Council member Jeff Collis said he's learned most of the fees associated with the Boyd project, such as stormwater runoff measures and erosion control costs, stemmed from federal guidelines “that we have no control over.”

“For the car wash, why would that be $284,000? That seems like a lot,” he told city Utilities Director Lee Smith.

Smith said that he was not familiar with the car wash estimate, but offered to investigate the matter and present his findings to the board next month.

“I've tried to think of another regulation that is more anti-business, but I can't think of anything,” said councilman Ron Stephens.

Councilman Steve Caraker said he now wishes that he would have “read the fine print.”

City Manager John Connet told the council that staff members have been working on other options “of how we are charging our system development charge.” He said they hope to have more information, including a comparison of rates levied by other cities, to the council at the next month's meeting.

Smith presented proposed revisions to the city's standard operating procedure for system development charges to the council. The revisions offered a rebate of up to 50 percent for redevelopment properties that show at least a 30 percent reduction of usage compared to the property's previous owner.

He said they can also go back and review a new customer's usage over 18 months to see if they qualify for a rebate or credit for the system development charge because they used less water than was first estimated. Customers who use more would get a bill.

“There's got to be a better way,” Caraker said.

Connet asked the council if they wanted to vote on the proposed revisions or wait until they have more information at their next meeting. The council chose to wait.

Let's “throw the baby out with the bath water and get a new baby,” Caraker quipped.

Sweepstakes swept out

City council members chose to adopt a resolution that will corral sweepstakes and gaming machine operators in the city's Industrial-1 district. The amendment kills the grandfathered status sweepstakes operators had when the city passed its first ordinance to contain the businesses a few years ago.

In a memo to council members, city attorney Sam Fritschner noted that a “small zoning loophole may exist” in the current zoning codes to allow sweepstakes operations to remain active in non-conforming districts.

“Certain machines that are currently defined to be among ‘electronic gaming operations' remain legal in this state,” he wrote. “I refer to them as ‘merchandise machines' because they are permitted so long as the prize is merchandise that does not exceed $10 in value.

“The concern is that as long as an establishment retains a merchandise machine it remains grandfathered in any zoning district as an ‘electronic gaming operation.' If the location later finds a way to bring in and have a court declare legal a true gambling machine, as many have found a way to do in the past, the ‘merchandise machine' will have carried the grandfathering through for the gambling machine, which would frustrate the City Council's intent.”

The amended ordinance distinguishes between merchandise machines and other sweepstakes machines, restricting them all to the city's I-1 district, ending an operator's grandfather status after six months.

The city's planning board recommended the change by a vote of 7-2.

Parking woes

Main Street business owner Eva Ritchey told the council that several merchants have been working on a committee to brainstorm solutions to the parking problems they see downtown.

“We would like to have uniform parking signs... by Oct. 1,” she said, adding that they also would like to have two lots designated for downtown employees only to keep them from taking up spaces used by visitors.

She said the committee recommends the city look at restoring free parking in the Dogwood lot, consider paid parking with credit card kiosks in all of the other lots and lifting the time limit of three hours.

Ritchey said the committee also hopes the city will conduct a feasibility study for parking decks and shuttles and review its public parking policies “with hospitality in view.”

“It's time to move on this because if we don't move now, we'll be faced with a much bigger problem in 2017, 2018 and 2019,” she said.

Mayor Barbara Volk announced at the end of the council meeting that the city will host a public workshop on parking to be held from 5:30-7:30 p.m. Tuesday, Aug. 13, at the City Operations Center. The public is encouraged to attend.

In other action, City Council also:

--Adopted a resolution to move forward with plans to hold a bond referendum Nov. 5 that will ask citizens whether or not to issue a $6 million bond to cover park improvement bonds for Berkeley Mills Park. If the referendum is approved in November, citizens will see a property tax increase of at least 3 cents to cover the debt service on the bonds. The increase would start in 2014.

--Agreed to help in the effort to raise funds to restore the McClintock Clock on the corner of the Ewbank building on Main Street, by placing a notice on the city's website of where the public can donate to the project. The project is estimated to cost between $4,800 and $5,000.

--Announced that the city is seeking ideas from the public about what to name the city's new dog park nearing completion on Seventh Avenue. The public is invited to email or phone city hall with suggestions over the next 21 days. The council is set to take up the suggestions at its next meeting Aug. 1.

--Approved an application for a $40,000 planning grant from the N.C. Rural Center to help cover the cost of an asset management plan and water and sewer master plans. The application is due July 17.

<p>An old issue bubbled to the surface at Thursday's Hendersonville City Council meeting — how much of an impact fee charged to new water and sewer customers is too much?</p><p>The city has pondered that question for months. On Thursday, Larry Rogers, executive director of Partners for Economic Progress, added his answer. </p><p>In addition to paying tap fees, new customers are assessed a system development charge based on the city's incurred cost to connect a property to its system. In August 2012, City Council adopted a new formula for calculating the charge based on usage, which resulted in charges of up to five times the amount once paid on incoming businesses. </p><p>For some, the cost is 18 times what they paid to get a business going in the city three years ago, Rogers said.</p><p>“Recently, a local businessman that owns a drive-through car wash on the east side of town began to look at the possibility of building another one, say on Asheville Highway. He goes by the city water department and asked them to determine the costs to do this under the new city hook-up rules,” he said.</p><p>The businessman was astonished to learn that the estimated bill for the impact fee “came to an unreal $284,139,” Rogers said. The developer estimated his cost to hook up his existing car wash about three years ago was around $18,000.</p><p>“This is not the only charge that business owners face when building a new business in Hendersonville,” Rogers said. Outside of a tap fee, “they must pay for stormwater runoff installation costs, erosion control costs, sidewalks, landscaping, building permits and inspection fees. The new Boyd Automotive business being constructed on Spartanburg Highway has already endured over $486,000 in city-required fees and payments on their $3 million project... We ask City Council to reconsider your anti-growth business policies.”</p><p>Council member Jeff Collis said he's learned most of the fees associated with the Boyd project, such as stormwater runoff measures and erosion control costs, stemmed from federal guidelines “that we have no control over.”</p><p>“For the car wash, why would that be $284,000? That seems like a lot,” he told city Utilities Director Lee Smith.</p><p>Smith said that he was not familiar with the car wash estimate, but offered to investigate the matter and present his findings to the board next month.</p><p>“I've tried to think of another regulation that is more anti-business, but I can't think of anything,” said councilman Ron Stephens.</p><p>Councilman Steve Caraker said he now wishes that he would have “read the fine print.”</p><p>City Manager John Connet told the council that staff members have been working on other options “of how we are charging our system development charge.” He said they hope to have more information, including a comparison of rates levied by other cities, to the council at the next month's meeting.</p><p>Smith presented proposed revisions to the city's standard operating procedure for system development charges to the council. The revisions offered a rebate of up to 50 percent for redevelopment properties that show at least a 30 percent reduction of usage compared to the property's previous owner. </p><p>He said they can also go back and review a new customer's usage over 18 months to see if they qualify for a rebate or credit for the system development charge because they used less water than was first estimated. Customers who use more would get a bill.</p><p>“There's got to be a better way,” Caraker said. </p><p>Connet asked the council if they wanted to vote on the proposed revisions or wait until they have more information at their next meeting. The council chose to wait.</p><p>Let's “throw the baby out with the bath water and get a new baby,” Caraker quipped.</p><p><b>Sweepstakes swept out</b></p><p>City council members chose to adopt a resolution that will corral sweepstakes and gaming machine operators in the city's Industrial-1 district. The amendment kills the grandfathered status sweepstakes operators had when the city passed its first ordinance to contain the businesses a few years ago.</p><p>In a memo to council members, city attorney Sam Fritschner noted that a “small zoning loophole may exist” in the current zoning codes to allow sweepstakes operations to remain active in non-conforming districts.</p><p>“Certain machines that are currently defined to be among 'electronic gaming operations' remain legal in this state,” he wrote. “I refer to them as 'merchandise machines' because they are permitted so long as the prize is merchandise that does not exceed $10 in value. </p><p>“The concern is that as long as an establishment retains a merchandise machine it remains grandfathered in any zoning district as an 'electronic gaming operation.' If the location later finds a way to bring in and have a court declare legal a true gambling machine, as many have found a way to do in the past, the 'merchandise machine' will have carried the grandfathering through for the gambling machine, which would frustrate the City Council's intent.”</p><p>The amended ordinance distinguishes between merchandise machines and other sweepstakes machines, restricting them all to the city's I-1 district, ending an operator's grandfather status after six months.</p><p>The city's planning board recommended the change by a vote of 7-2.</p><p> </p><p><b>Parking woes</b></p><p>Main Street business owner Eva Ritchey told the council that several merchants have been working on a committee to brainstorm solutions to the parking problems they see downtown.</p><p>“We would like to have uniform parking signs... by Oct. 1,” she said, adding that they also would like to have two lots designated for downtown employees only to keep them from taking up spaces used by visitors.</p><p>She said the committee recommends the city look at restoring free parking in the Dogwood lot, consider paid parking with credit card kiosks in all of the other lots and lifting the time limit of three hours. </p><p>Ritchey said the committee also hopes the city will conduct a feasibility study for parking decks and shuttles and review its public parking policies “with hospitality in view.”</p><p>“It's time to move on this because if we don't move now, we'll be faced with a much bigger problem in 2017, 2018 and 2019,” she said.</p><p>Mayor Barbara Volk announced at the end of the council meeting that the city will host a public workshop on parking to be held from 5:30-7:30 p.m. Tuesday, Aug. 13, at the City Operations Center. The public is encouraged to attend.</p><p><b>In other action, City Council also: </b></p><p>--Adopted a resolution to move forward with plans to hold a bond referendum Nov. 5 that will ask citizens whether or not to issue a $6 million bond to cover park improvement bonds for Berkeley Mills Park. If the referendum is approved in November, citizens will see a property tax increase of at least 3 cents to cover the debt service on the bonds. The increase would start in 2014.</p><p>--Agreed to help in the effort to raise funds to restore the McClintock Clock on the corner of the Ewbank building on Main Street, by placing a notice on the city's website of where the public can donate to the project. The project is estimated to cost between $4,800 and $5,000.</p><p>--Announced that the city is seeking ideas from the public about what to name the city's new dog park nearing completion on Seventh Avenue. The public is invited to email or phone city hall with suggestions over the next 21 days. The council is set to take up the suggestions at its next meeting Aug. 1.</p><p>--Approved an application for a $40,000 planning grant from the N.C. Rural Center to help cover the cost of an asset management plan and water and sewer master plans. The application is due July 17.</p><p>Reach Weaver at emily.weaver@blueridgenow.com or 828-694-7867.</p>